overstock

Overstock refers to excess inventory held by a business beyond what is expected to be sold within a given period. It can affect finished goods, work in process, raw materials, or spare parts and arises in retail, manufacturing, and logistics operations.

Common causes include forecasting errors, promotional overestimations, seasonal demand shifts, long supplier lead times, returns and reverse logistics, product life-cycle changes, or unplanned ramp-ups in production.

The presence of overstock ties up capital, increases storage and handling costs, and raises the risk of obsolescence. It can trigger price markdowns, volume discounts, and write-downs, potentially harming gross margins and cash flow.

Managing overstock involves improving forecasting accuracy and inventory optimization, using metrics such as inventory turnover, days of inventory on hand, and sell-through rate. Techniques include just-in-time elements, safety stock tuning, cross-channel stock visibility, and dynamic pricing.

Common remedies for excess inventory include targeted promotions and bundling, liquidation through discount channels, selling to off-price retailers, returning stock to suppliers, or diverting items to secondary markets, donation programs, or recycling.

In retail practice, Overstock is also the term used for items held in excess by a retailer or supplier, and it is the name of Overstock.com, a U.S.-based online retailer that specializes in surplus and closeout merchandise.